Knowledge Workers/Industries

Knowledge Ratio

Every new era has a unique knowledge base that distinguishes it from the previous era. New technologies and new skills open up the opportunity to develop new products, new processes, new markets and new industries. In order to study a current era (cross sectional and time series analysis) we require a measure of the knowledge component. Knowledge ratios were developed for this purpose.

DEFINITION

The knowledge ratio is the number of knowledge workers expressed as a percentage of total employment in an industry, individual company or organization. (for a definition of knowledge worker, see the next chapter).


   Firm knowledge ratio =   number of knowledge workers employed by firm
                            ____________________________________________
                                total employment in the firm


   SIC knowledge ratio  = number of knowledge workers employed by industry
                          _______________________________________________
                              total employment in an industry


   Industrial Division Knowledge Ratio
                        = number of knowledge workers in a major group
                          _____________________________________________ 
                              total employment in a major group

For this study the U.S. 1991 Knowledge Ratio Table was used to construct a Nova Scotia Knowledge Ratio Table at the four digit SIC level. The Nova Scotia table was enhanced by applying the ratios to the three digit level of the SIC where one or more four level ratios had been identified from the U.S. table. The ratios for the remaining elements were determined arbitrarily based on type of industry, similar product or service, etc. The following figure illustrates a small segment of the constructed table.

Nova Scotia SIC Knowledge Ratios

SIC   IDIV      KRATIO   SIC Description

4611    G        21.10   Natural Gas Pipeline Transport Industry
4612    G        21.10   Crude Oil Pipeline Transport Industry
4619    G        21.10   Other Pipeline Transport Industries
4711    G        17.50   Grain Elevator Industry
4791    G        17.50   Refrigerated Warehousing Industry
4799    G        17.50   Other Storage and Warehousing Industries n.e.c.
4811    H        72.40   Radio Broadcasting Industry
4812    H        72.40   Television Broadcasting Industry
4813    H        72.40   Combined Radio and Television Broadcasting Industry
4814    H        72.40   Cable Television Industry
4821    H        33.20   Telecommunication Carriers Industry
4839    H        33.20   Other Telecommunication Industries
4841    H         7.40   Postal Service Industry
4842    H         7.40   Courier Service Industry

The figure illustrates the concept of knowledge ratio. In the Natural Gas Pipeline Transport Industry (SIC 4611), 21.1 percent of employees are knowledge workers. In the Grain Elevator Industry (SIC 4711), 17.5 percent of employees are knowledge workers. Each industry has a different knowledge ratio, reflecting the difference in the level of 'knowledge' required to maintain the industry. More professional staff is required in the Natural Gas Pipeline Industry than in the Grain Elevator Industry. In some industries, the proportion of professional staff can be very high; 72.4% in Television, for example, or very low; 7.4% in Postal Service.

The ratio does not strictly reflect educational attainment, e.g. Phd's, but suggests market demand and supply for qualified staff. Taxi drivers may have Phd's, but it is not a requirement of employment.

This study is dependant, in part, on the applicability of the U.S. Knowledge Ratio Table to Nova Scotia. Verification of the Nova Scotia ratios is outside the scope of this study but would require an independent survey to compute their value. Surveys should be conducted from time to time (annually) to gauge changes in various sectors of the economy. It should be expected that the ratios will not be fixed, but will increase or decrease over time.

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